Emirates stays the course to grow routes, fleet size

Tim Clark is relieved, if only slightly, because the Emirates Airline president sees a less bleak future for the local carrier than he projected a few months ago. Following better-than-expected performance through the middle of this year, Clark believes that in 2010 the airline industry should benefit from increased consumer spending, unless the recession deepens or stock markets decline strongly.

In June, at the International Air Transport Association annual meeting in Kuala Lumpur, Malaysia, Clark characterized everyday business as a “firefight,” with the Dubai carrier having discounted fares by 30 percent. But three months later, in early September, he said he saw signs of recovery, at least by next summer.

Emirates reportedly has increased fares by more than 20 percent since June, with mid-year passenger traffic growing by a similar proportion over that of 2008. Clark even said he felt “a little bit guilty” for having permitted deep discounting since “clearly the market would have supported higher fares.”’

Nevertheless, he acknowledged that it will be some time before demand recovers fully. Indeed, the airline initiated a major television and online marketing campaign in late September geared to promoting expatriate residency in the emirate.

The airline claims that this approach to marketing is a sign of confidence, but it also could be interpreted as an admission of how bad things have become. “Some may question our launching this massive campaign at a time of economic turmoil around the world, but Emirates is confident there is nothing more important than investing to win new customers,” a spokesman said.

Part of the carrier’s strategy during the recession has been to develop its existing routes while reducing its expansion into new markets. In February, Emirates announced additional flights in 2009 as it prepared to take delivery of 18 aircraft that would increase passenger and cargo capacity by 14 percent and 17 percent, respectively.

“The next year is not going to be an easy ride for the airline industry,” commented Emirates group and airline chairman and chief executive HH Sheikh Ahmed bin Saeed Al-Maktoum recently. “Emirates has prepared the best we can for the challenges, but we also see it as a time of opportunity. With our significant capacity increase, this will be a year of consolidation for us, with fewer new routes launched.

“We will concentrate on strengthening our presence where there is greater demand. Our new capacity will be deployed where we see growth potential, particularly in Africa and the Middle East,” he added. Those are the carrier’s two strongest markets, with 17 percent and 6 percent growth, respectively, in the preceding 12 months. Last month, Emirates introduced flights from Dubai to Durban, South Africa.

In May, the airline increased frequency on its Los Angeles and San Francisco routes to daily flights, swelling capacity from 1,600 seats to 3,200 a week from Dubai to the U.S. West Coast. It also added flights to Australia.

In Europe, it has increased flights to Athens, Istanbul, Milan and Moscow, and between Cyprus and Malta. Arrival of two Boeing 777F freighters this year also has raised Emirates SkyCargo capacity.

However, it is not only in planning its services that Emirates has proved adaptable; the airline also has adjusted its fleet mix to accommodate changing circumstances, not least the delayed delivery of Airbus A380 very large airliner. As of the end of September, the Emirates fleet comprised 137 widebody aircraft.

However, despite the recent downturn, the carrier is well ahead of its own long-term plans for fleet growth; in 2001, it had projected that by 2010 it would be flying 100 aircraft.

The airline expects to reintroduce the A380 on its New York route in the first half of next year, by which time recovering traffic might have justified Clark’s optimism. Emirates had flown from New York in 2008 before assigning the aircraft its to its Toronto, Canada, and Bangkok, Thailand routes and replacing it with the 777.

Currently, Emirates’s five A380s are operated from Dubai to Auckland, New Zealand; Bangkok; London; Sydney, Australia; and Toronto. It is set to begin flights to Seoul, Korea, next month and to Paris next February.

In June, Jean-Luc Grillet, head of Emirates operations in France and the Benelux countries, revealed the schedule for A380 deliveries: two are expected to arrive before year-end, having slipped from August; six are to join the airline next year, followed by five in 2011, 12 in 2012 and 11 in 2013. The remaining 17 from its total order for 58 are to be delivered during 2014-2016. Emirates also reportedly has deferred delivery of up to 10 B777s until after 2010.

At the end of July, the Dubai carrier became the largest 777 airline operator when it accepted its 78th example, leaving a further 28 of the Boeing twinjets still to be delivered. It took delivery of its first 777 in 1996. The Emirates 777 fleet is equipped with a 1,000-channel in-flight information, communication and entertainment system.

In June, Clark expressed doubts about Boeing’s best options in seeking to modify the 777, for which the manufacturer has proposed a larger wing. He said he feels the existing wing is “already very good,” but added, “I’d be thinking seriously about an all-new aircraft.” Observers reportedly believe Boeing needs to update, or replace, the 777 to complement the larger 747-800 until the airframer concludes the market is large enough to accommodate an A380 competitor.